The holiday season is normally a time when a lot of movies are released and attendance at theaters goes up as people flock to see the latest Hollywood fare. This year, in addition to the fictional excitement playing at the local movie theater, we have our own real-life drama playing out in Washington, D.C. A real “cliff hanger” shall we say.
Ah yes, the “fiscal cliff.” This is the latest adventure brought to you by our elected officials who just can’t seem to ever avoid a crisis by actually doing the jobs we elected them to do for all of us. In case you missed it, the term “fiscal cliff” was popularized by the Chairman of the Federal Reserve, Ben Bernanke, when he testified before the House Financial Services Committee back in February. He used it to describe the massive fiscal problem that would be created if large across-the-board spending cuts and tax increases would take place on January 1, 2013. This is the dynamic duo of automatic cuts to domestic and military spending via “sequestration” and the elimination of the Bush tax cuts, both prior actions of Congress.
Bernanke, along with just about every other economist breathing, has stated that going off this fiscal cliff will greatly slow the growth of our gross domestic product. The CBO estimates it would cause a reduction of about 4 percent in GDP for 2013. In other words, it will drive the economy back into a recession, which won’t be good for businesses or job seekers.
Having been given this warning by Bernanke back in February and the information from the CBO, you would assume that Congress (i.e., our leaders) would have immediately kicked into gear to fashion a game plan to deal with the impending crisis and by now we would have a solution in hand. And you would be wrong. No, for the last nine months, Congress has done nothing – zippo, nada, zilch – describe it however you like. Oh yes, we did have an election. But there wasn’t really much discussion of this fiscal cliff or how to solve it. Wouldn’t want to upset the voters or muddy up an election with a discussion of how to deal with a massive fiscal problem waiting to explode.
So here we are with a month left in the year (much less in terms of actual legislative days in Congress) and we are still looking at an impending fiscal crisis. Will Congress and President Obama come together and find a way to save the day? Can Democrats and Republicans compromise and reach a consensus on a solution? Will a real long-term solution to the fiscal problem be found or will Congress merely adopt a short-term fix and kick the can down the road for many more months?
These and other weighty questions await the action of Congress. Stay tuned for the latest episode out of Washington. Even the folks in Hollywood couldn’t dream this stuff up. It’s too unbelievable.